Chapter 2

Question 1

Tax bills are handled by which committee in the U.S. House of Representatives?

A. Taxation Committee
B. Ways and Means Committee
C. Finance Committee
D. Budget Committee
E. None of these

Answer 1

B. Ways and Means Committee

Question 2

Federal tax legislation generally originates in what body?

A. Internal Revenue Service
B. Senate Finance Committee
C. House Ways and Means Committee
D. Senate Floor
E. None of these

Answer 2

C. House Ways and Means Committee

Question 3

Subtitle A of the Internal Revenue Code covers which of the following taxes?

A. Income taxes
B. Estate and gift taxes
C. Excise taxes
D. Employment taxes
E. All of these

Answer 3

A. Income taxes

Question 4

In S 212(1), the number (1) stand for the:

A. Section number
B. Subsection number
C. Paragraph designation
D. Subparagraph designation
E. None of these

Answer 4

C. Paragraph designation

Question 5

Which of these is not correct citation to the Internal Revenue Code?

A. Section 211
B. Section 1222(1)
C. Section 2(a)(1)(A)
D. Section 280B
E. All of these are correct cites.

Answer 5

E. All of these are correct cites.

Question 6

Which of the following is not an administrative source of tax law?

A. Field Service Advice
B. Revenue Procedure
C. Technical Advice Memoranda
D. General Counsel Memorandum
E. All of these are administrative sources

Answer 6

E. All of these are administrative sources

Question 7

Which of the following types of Regulations has the highest tax validity?

A. Temporary
B. Legislative
C. Interpretive
D. Procedural
E. None of these

Answer 7

B. Legislative

Question 8

Which statement is not true with respect to a Regulation that interprets the tax law?

A. Issued by the U.S. Congress
B. Issued by the U.S. Treasury Department
C. Designed to provide an interpretation of the tax law.
D. Carries more legal force than a Revenue Ruling.
E. All of these statements are true.

Answer 8

A. Issued by the U.S. Congress

Question 9

In addressing the importance of a Regulation, an IRS agent must:

A. Give equal weight to the Code and the Regulations.
B. Give more weight to the Code rather than to a Regulation.
C. Give more weight to the Regulation rather than to the Code.
D. Give less weight to the Code rather than to a Regulation
E. None of these

Answer 9

A. Give equal weight to the Code and the Regulations.

Question 10

Which item cannot be cited as a precedent?

A. Regulations
B. Temporary Regulations
C. Technical Advice Memoranda
D. U.S. District Court Decision
E. None of these

Answer 10

C. Technical Advice Memoranda

Question 11

What statement is not true with respect to Temporary Regulations?

A. May not be cited as a precedent.
B. Issued as Proposed Regulations.
C. Automatically expire within three years after the date of issuance.
D. Found in the Federal Register
E. All of these statements are true.

Answer 11

A. May not be cited as a precedent.

Question 12

What administrative release deals with a proposed transaction rather than a completed transaction?

A. Letter Ruling
B. Technical Advice Memorandum
C. Determination Letter
D. Field Service Advice
E. None of these

Answer 12

A. Letter Ruling

Question 13

Which of the following indicates that a decision has precedential value for further cases?

A. Stare decisis
B. Golsen doctrine
C. En banc
D. Reenactment doctrine
E. None of these

Answer 13

A. Stare decisis

Question 14

A taxpayer who loses in a U.S. District Court may appeal directly to the:

A. U.S. Supreme Court
B. U.S. Tax Court
C. U.S. Court of Federal Claims
D. U.S. Circuit Court of Appeals
E. All of these

Answer 14

D. U.S. Circuit Court of Appeals

Question 15

If a taxpayer decides not to pay a tax deficiency, he or she must go to which court?

A. Appropriate U.S. Circuit Court of Appeals.
B. U.S. District Court
C. U.S. Tax Court
D. U.S. Court of Federal Claims
E. None of these

Answer 15

C. U.S. Tax Court

Question 16

A jury trial is available in the following trial court:

A. U.S. Tax Court
B. U.S. Court of Federal Claims
C. U.S. District Court
D. U.S. Circuit Court of Appeals
E. None of these

Answer 16

C. U.S. District Court

Question 17

A taxpayer may not appeal a case from which court:

A. U.S. District Court
B. U.S. Circuit Court of Appeals
C. U.S. Court of Federal Claims
D. Small Case Division of the U.S. Tax Court
E. None of these

Answer 17

D. Small Case Division of the U.S. Tax Court

Question 18

Which publisher offers the Standard Federal Tax Reporter?

A. Research Institute of America
B. Commerce Clearing House
C. Prentice-Hall
D. LexisNexis
E. None of these

Answer 18

B. Commerce Clearing House

Question 19

Which is presently not a major tax service?

A. Standard Federal Tax Reporter
B. Federal Taxes
C. United States Tax Reporter
D. Tax Management Portfolios
E. All of these are major tax services

Answer 19

B. Federal Taxes

Question 20

Which publisher offers the United States Tax Reporter?

A. Research Institute of America
B. Commerce Clearing House
C. LexisNexis
D. Tax Analysts
E. None of these

Answer 20

A. Research Institute of America

Question 21

When searching an online tax service, which approach is more frequently used?

A. Code section approach
B. Keyword approach
C. Table of contents approach
D. Index
E. All are about the same

Answer 21

B. Keyword approach

Question 22

A researcher can find tax information on home page sites of:

A. Governmental bodies
B. Tax academics
C. Publishers
D. CPA firms
E. All of these

Answer 22

E. All of these

Question 23

Tax research involves which of the following procedures:

A. Identifying and refining the problem
B. Locating the appropriate tax law sources
C. Assessing the validity of the tax law sources
D. Follow-up
E. All of these

Answer 23

E. All of these

Question 24

Which tax-related website probably gives the best policy-orientation results?

A. taxalamanac.org
B. irs.gov
C. taxsites.com
d. taxanalysts.com
E. usataxcourt.gov

Answer 24

D. taxanalysts.com

Question 25

Which court decision would probably carry more weight?

A. Regular U.S. Tax Court decision
B. Reviewed U.S. Tax Court decision
C. U.S. District Court decision
D. Tax Court Memorandum decision
E. U.S. Court of Federal Claims

Answer 25

B. Reviewed U.S. Tax Court decision

Question 26

Which regulations have the force and effect of law?

A. Procedural Regulations
B. Finalized Regulations
C. Legislative Regulations
D. Interpretive Regulations
E. All of these

Answer 26

C. Legislative Regulations

Question 27

Which items tell taxpayers the IRS’s reaction to certain court decisions?

A. Notices
B. Revenue Procedures
C. Revenue Rulings
D. Actions on Decisions
E. Legislative Regulations

Answer 27

D. Actions on Decisions

Question 28

Which court decision carries more weight?

A. Federal District Court
B. Second Circuit Court of Appeals
C. U.S. Tax Court decision
D. Small Cases Division of U.S. Tax Court
E. U.S. Court of Federal Claims

Answer 28

B. Second Circuit Court of Appeals

Question 29

Which company does not publish citators for tax purposes?

A. John Wiley & Sons
B. Commerce Clearing House
C. Research Institute of America
D. Westlaw
E. Shepard's

Answer 29

A. John Wiley & Sons

Question 30

Which is not a primary source of tax law?

A. Notice 89-99, 1989-2 C.B. 422.
B. Estate of Harry Holmes v. Comm., 326 U.S. 480 (1946)
C. Rev. Rul. 79-353, 1979-2 C.B. 325.
D. Prop. Reg. S 1.7524T(f).
E. All of these are primary sources.

Answer 30

D. Prop. Reg. S 1.7524T(f).

Question 31

Which statement is incorrect with respect to taxation on the CPA exam?

A. The CPA exam now has only four parts.
B. There are no longer case studies on the exam.
C. A candidate may not go back after exiting a testlet
D. Simulations include a four-function pop-up calculator.
E. None of these are incorrect.

Answer 31

B. There are no longer case studies on the exam.

Question 32

The Internal Revenue Code was first codified in what year?

A. 1913
B. 1923
C. 1939
D. 1954
E. 1986

Answer 32

C. 1939